The Comprehensive Economic and Trade Agreement (CETA) is a free trade agreement between the EU and Canada. These trading partners have to open up their markets to each other and adopt joint rules, which will help them safeguard and grow their prosperity. CETA is a major opportunity for us to lay down fair and sound rules for ever deepening globalisation and to play an active role in it.

Hardly any more tariffs on industrial goods, much better access for European firms to the Canadian market, lower costs for small businesses due to common rules: these are just three benefits of the trade accord. In CETA, the EU has agreed with Canada on high standards which will form a benchmark for future trade agreements.

The technical negotiations on CETA ended in August 2014. The EU and Canada signed the free trade agreement on 30 October 2016. The European Parliament gave its assent on 15 February 2017. CETA has been provisionally applied since 21 September 2017. This, however, applies to only to those chapters for which the EU undisputedly has sole responsibility. The agreement now needs to be ratified by the parliaments of all 28 EU Member States before it can fully enter into force.

Canada is already an important partner for Europe – and vice versa. Around 9.5% of Canada’s foreign trade is with the 28 EU Member States, and German small and medium-sized firms are already investing a lot in and exporting a lot to Canada – thereby safeguarding jobs and prosperity in Germany. With CETA in place, our economic relations will become even more intense.

“CETA represents progress on the way to shaping globalisation in a social and sustainable way.” Brigitte Zypries, Federal Minister for Economic Affairs and Energy

CETA: facts and figures

c. 99

percent
of all tariffs between the EU and Canada are being abolished by CETA.

€470

million
is the Commission’s estimate of the potential increase in GDP in the EU.

c. €12

billion
is the Commission’s estimate of the potential increase in GDP in the EU.

112

billion Canadian dollars
is the annual volume of the public procurement markets in Canada which will be opened up to European firms by CETA.

What is CETA?

Building up trade relations

A trade and investment agreement is intended to further strengthen the good relations between the EU and Canada. Market access for European industrial goods, for agricultural products and services, and in the field of government procurement, is to be significantly improved – whilst bolstering the high social and environmental standards.

The European Union achieved a major success in the negotiations in the field of public procurement in particular. Under CETA, Canada will open up tendering procedures of the provinces and municipalities – the levels of administration at which the bulk of public contracts are awarded – to European bidders. Germany has long been open to foreign bidders for government contracts. Under CETA, this will also apply to German firms in Canada – particularly in key sectors like energy, telecommunications and services.

Cutting tariffs, opening up markets, reducing the burden on business

CETA will cut close to 98% of tariffs that still exist between the two economies. This will create new scope for selling goods and services on either side of the Atlantic: not only for industrial goods, but also for agricultural produce. With CETA, service providers will enjoy easier access to the postal and telecommunications sectors, for instance. Canada has also agreed to open up some routes in its maritime sector.

A joint agreement will generate a fresh stimulus for small and medium-sized firms: According to the European Commission, the tariff cuts could save European companies some €590 million in expenses every year. They will also gain the best level of access to the Canadian federal, provincial and municipal public-sector markets that has ever been granted to non-Canadian companies. The European Commission has estimated that CETA will boost bilateral trade in goods and services by some 23% across the EU, and that the EU’s annual GDP will be increased by approximately €12 billion a year.

CETA protects high standards on both sides of the Atlantic

CETA confirms social and environmental standards and protects special European and Canadian features and achievements, such as regional specialities, public services and cultural diversity. It ensures that measures are maintained and can be taken in future to shape public services and to regulate, e.g. in the fields of education, health, social affairs, water supply, culture and media.CETA does not create any obligation to privatise public services, and it will remain possible to bring such services back under the aegis of municipalities in future.

Also, all the requirements in a contracting party’s laws and ordinances on labour and welfare protection naturally remain in force – including the provisions on the minimum wage and collective agreements. Germany has introduced wide-ranging special rules on shaping and organising public services and regulation.

Cultural diversity and the precautionary principle remain in place

CETA will not impact on cultural diversity. The agreement confirms the desire of the contracting parties to protect cultural diversity. Cultural funding is safeguarded at several points in the agreement, and no market liberalisation commitments have been entered into for audiovisual services.

And the EU’s precautionary principle, according to which measures can be taken even if the scientific basis is still incomplete, in order to prevent dangers arising to human health or the environment, will continue to be applied, e.g. regarding the non-licensing of certain plant protection products or certain procedures in food production.

CETA: setting a benchmark for future agreements

CETA is a modern agreement which provides a huge opportunity to lay down fair and sound rules for ever deepening globalisation and to play an active role in it. The high standards agreed between the EU and Canada will form a benchmark for future trade agreements. Find out more (in German).

Focusing on investment protection

Greater transparency thanks to modern investment protection

The rules on investment protection agreed in CETA are forward looking. By providing for publicly legitimated jurisdiction, transparent procedures and public hearings, CETA sets modern standards for investment dispute resolution.

It has proved possible to agree in CETA on modern investment protection rules which point the way forward. In place of the traditional investor-to-state dispute settlement (ISDS) with arbiters nominated by the parties to the dispute, CETA provides for a publicly legitimated investment tribunal with 15 judges appointed by the state and an appellate body for the settlement of investment protection disputes. Both tribunals will take their decisions in transparent proceedings with public hearings. All of the main procedural documents, such as rulings and submissions, will be published.

The substantive investment protection provisions in CETA have been worded in a precise, restrictive way. Also, the legislature’s right to regulate is confirmed in a separate article.

Scope for statutory measures retained

A study produced in 2014 on behalf of the Federal Ministry for Economic Affairs and Energy found that the protection enjoyed by Canadian investors under the substantive provisions on investment protection in CETA would be lower than the protection afforded to investors by German constitutional law and the law of the European Union ((Study in German (PDF: 340 KB), English summary (PDF: 7,3 KB)). In other words, CETA will not restrict the legislative scope needed to protect the public interest, including national security, the environment, and public health.

9. Does CETA pose a threat to German cultural subsidies?

Where do we stand, and what are the next steps?

The technical negotiations on CETA were concluded in August 2014, and the legal scrubbing in February 2016. Following this, the final text of the agreement was published by the European Commission and can be found here (PDF, 9MB). After the EU Member States signed the document, the EU and Canada signed the free trade agreement on 30 October 2016. The European Parliament gave its assent on 15 February 2017. The agreement now needs to be ratified by all 28 EU Member States.

Not all parts of CETA fall within the competence of the EU for common trade policy. Some parts remain within the competence of the EU Member States. For this reason, not only Canada and the European Union, but all EU Member States are contracting parties. So, before the free trade agreement can take effect, it must be ratified at national level by all 28 Member States. In Germany, the ratification process is governed by the provisions of the Basic Law. This states that a ratification act (also called a treaty act) must be adopted. The Bundestag and the Bundesrat are involved in this process.

On 15 February 2017 (in German), the European Parliament approved CETA and thus cleared the way for a provisional application of the “EU-only” part of the agreement. CETA has been provisionally applied since 21 September 2017. This, however, applies to only to those chapters for which the EU undisputedly has sole responsibility. The agreement now needs to be ratified by the parliaments of all 28 EU Member States, in line with national procedure, before it can fully enter into force. Among the provisions that require ratification by all EU Member States are those governing investor-state dispute settlement procedures, which, under CETA, will be handled by a investment court that is held accountable by the public.

Regarding the provisional application of CETA

Only those parts of the agreement which fall indisputably within the competence of the EU will be provisionally applied. This covers, for example, the agreements on tariff reductions and public procurement. Their provisional application will enable EU companies to benefit as quickly as possible from the new CETA rules.

Those parts of CETA which are not subject to provisional application – particularly the sections on investment protection and dispute settlement – cannot enter into force until the agreement has been ratified by all EU Member States and the entire agreement has taken effect.

Further information

28/08/2014 - PDF - CETA

Publication:Convenience translation of the summary of the legal expertise by Prof. Dr. Franz C. Mayer, LL.M. (Yale), University of Bielefeld, for the Federal Ministry of Economics and Energy regarding the question: “Is the planned free trade agreement of the EU with Canada (Comprehensive Economic and Trade Agreement, CETA) a mixed agreement?”

Publication:Convenience translation of the summary of the legal expertise by Dr. Stephan Schill LL.M. (NYU) for the Federal Ministry of Economics and Energy regarding the “Impact of the provisions on investment protection and on investor-state dispute settlement in the draft Free Trade agreement between the EU and Canada (CETA) on the scope for the legislature to act”